ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF Education Channel
  2. Dollar Sturdiness May Support This Small-Cap ETF
ETF Education Channel
Share

Dollar Sturdiness May Support This Small-Cap ETF

Tom LydonJan 19, 2023
2023-01-19

With the benefit of seven interest rate increases by the Federal Reserve, the U.S. dollar was one of the 2022 stars of the currency complex, pinching export-heavy sectors along the way. While there are expectations in place that the dollar will weaken this year, that doesn’t necessarily mean the greenback will collapse into a bear market. In fact, with some strategists constructive on small-cap stocks and exchange traded funds as 2023 investment ideas, it can be inferred from that sentiment that the dollar will remain somewhat sturdy this year.

That could be good news for the Invesco NASDAQ Future Gen 200 ETF (QQQS ). QQQS debuted last October as the latest addition to Invesco’s storied suit of “QQQ” ETFs — products linked to the Nasdaq 100 Index (NDX) and derivative benchmarks.

QQQS follows the Nasdaq Innovators Completion Cap Index, which is a smaller stock complement to NDX and the Nasdaq Next Generation 100 Index. Its focus on smaller stocks makes QQQS relevant in the dollar strength/weakness conversation.

“We anticipate some further narrowing in the yield gap in early 2023, but interest rates in the U.S. are still likely to remain higher than those in most other major developed countries even if the Fed cuts rates later in the year, limiting the dollar’s downside. Moreover, there is likely more risk that the Fed exceeds expectations on the upside than the downside given its concern about strength in the U.S. labor market fueling inflation,” according to Charles Schwab research.

Small-cap companies, including QQQS components, usually generate the bulk of their revenue on a domestic basis, meaning they’re less sensitive to dollar strength. That’s a plus because demand for greenbacks is robust.

“Demand for the dollar as a safe haven is likely to continue as a supportive factor in 2023. The ongoing war in Ukraine, trade conflicts, uncertainty about the path of the COVID virus and its impact on economic growth, and political upheaval in many parts of the world have made U.S. investments look relatively attractive over the past few years,” added Schwab.

While some sectors are more exposed to international exports than others, particularly in the large-cap arena, QQQS mitigates some of that risk with a 54.80% weight to healthcare stocks — a group that in small-cap territory, is largely dependent on domestic sales. The same is true of small-cap consumer cyclical names, which account for 8.52% of the QQQS portfolio.

For more news, information, and analysis, visit the ETF Education Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X